5 Quick Ways to Set Yourself Up for Financial Success

Is achieving financial freedom one of your dreams? No one wants to live all their life struggling to make ends meet. We all want to conquer the Everest of financial freedom. We all want to have the finer things in life. Don’t we? Imagine competing with the likes of Bill Gates for Forbes's top list of Billionaires.

That’s why every new year, millions of people resolve that they want to achieve financial freedom. The problem is, few of them know how to take action towards achieving this resolution. Lack of information on how to achieve financial success is killing the dream of financial success for many. Luckily for you, here are some tips on how you can set yourself up for financial success.

Understand Your Current Position

Every journey has a beginning. Oprah Winfrey has made a career out of motivating people based on her life experiences. She is now on the Forbes list of women billionaires in the world. One thing we do know about her is that Oprah appreciates where the journey started for her. She has done many interviews where she recalls her humble beginnings. 

To achieve financial success, you have to appreciate your current situation. How do you define your current situation? Start by compiling the list of all your debts. For example: mortgage, credit card debts, student, and car loans. The list is useful to have handy when preparing a debt management plan. You cannot achieve financial freedom if you have huge debts pulling you down. You need to find a way of keeping these debts in control.

Also, develop a savings list. Savings contribute to your cash flows. The money you have saved could be used to kick start your future investments. The amount of money you have in savings now could also inform your future saving decisions.

Outline Your Financial Success Goals

Once you have understood where you are, it is time to start thinking of the future. Begin by highlighting the objectives you want to accomplish, where you want to be, financially. It is about defining your financial success and what that looks like for you. Every person has a different definition of what their financial success is, so to figure out yours is a great place to start. At this point, you are giving yourself a glimpse of what the journey’s destination will be like. So, have some fun as you imagine what the taste of financial freedom feels like. It will help inform the goals you set for yourself. It would be wise to follow the SMART principle of setting goals. They should be: 

• Specific

• Measurable

• Achievable

• Relevant

• Time-bound

Set a realistic period to achieve your goals. For example, paying off your credit card debts within the year is an achievable short-term goal. The gradual repayment of your long-term debts without defaulting would count as a short-term achievement of these goals.

When highlighting these goals, it’s a good idea to set up the ‘how’ of achieving these goals and define the plans you have for getting there. For example, you may plan to improve your yearly saving by 30%. It would make sense to accompany this with a plan to minimize your spending by about 30% as well. If less spending isn’t something you can really do, your goals could be accompanied by plans on how you intend to improve or expand your level of income.

Develop a Budget

You could be earning a lot of money yet not enjoying financial freedom. It is no surprise to meet someone earning a lot of money but they are deep in debt. I know we all have that celebrity who serves as the best example of such a scenario. The problem with such people is that they spend more money than they earn.

One reason for this is that they lack a personal budget. A budget is a financial plan that includes an estimate of income and expenditures for a given period. In this definition, there is the use of the word “plan”. It means that you have to plan your expenses against your income. When you have a budget, it’s hard to fall into debt. On the other hand, a budget is also meant to help you achieve your savings and investment goals.

Save before You Spend

Everyone who has achieved financial success must have learned the art of saving. You could save in mutual funds and bonds. You could also decide that instead of putting your money in a normal savings account, you will place it in a retirement savings account. I have learned to follow the rule of saving before spending, instead of saving after spending. If you follow the latter, you’ll find that most of the time, you will be short of what you had planned to save. So, make it a rule to save first and then budget for the remaining income so that you can spend it in the best way possible.

Make Smart Investment Decisions

What is the striking similarity among all billionaires in the Forbes list? One of the common elements among them is that they are all proud business people. They have found ways to maximize their wealth by investing in the various sectors of the economy. In return, the wise investments they made have accelerated their pace to achieving financial success.

However, when it comes to the rich, they do not just throw their money at investments. They are smart about the investments they make. The fact they are risk-takers does not mean they do it stupidly.  They take their time to analyze investments and settle for those that they feel will bring returns with time.

As a new investor in the game, it would be wise to play it safe but not too safe. Unless you are planning to introduce a new innovative product to the market, consider diversifying your risks. Diversification in this case includes putting your money in some passive investments and the rest in investments you will be active in. For example, you can put some of your money in stock and leave the rest to start your business.

Achieving financial freedom is not something that can just be achieved overnight. It is a journey that requires a constant commitment to the goal. It is a journey that requires you to develop saving skills. It also requires you to be ready to participate in the game of smart investments.

Now that you know the planning of how to plan for financial freedom, start your journey and see where it takes you. It is not an easy road, but it can be a good one!